Indian investors are increasingly trusting mutual funds: Ananth Narayan Gopalakrishnan, Whole Time Member of SEBI
At the ASSOCHAM 16th Mutual Fund Summit, Chief Guest Mr. Ananth Narayan Gopalakrishnan, Whole Time Member, Securities & Exchange Board of India (SEBI) said, amidst stable macroeconomic conditions and robust corporate earnings, the financial landscape in India has witnessed a significant shift, with more individuals channelling their savings towards risk capital formation. The mutual fund ecosystem has played a crucial role in this transformation, stepping up remarkably to earn the trust of Indian investors.
This is evident from the impressive growth in unique mutual fund investors, reflecting a compounded annual growth rate of 18% during this period. The digitization of services and user-friendly access have further accelerated this trend, laying a strong foundation for sustained growth. He added "Over the past three years, key benchmarks, including the Sensex, have delivered a commendable compounded annual growth rate (CAGR) of 14%, with an annualized realized volatility of just 14.3%. Compared to global markets, this performance stands out for its higher returns and lower volatility.
By unlocking the potential of investment opportunities in India for the goal of Viksit Bharat, He shed light on increasing the number of investor advisors in the country, focus should be on expanding the network of distributors and enhancing the role of the mutual fund industry, which has delivered remarkably as a flagship of the securities market. Mutual fund members have gained the trust of investors through initiatives like light regulations, reduced compliance, and fostering innovation. As a responsible partner in capital formation, the mutual fund industry is committed to furthering financial inclusion, raising awareness of higher risks, and streamlining structures to increase efficiency. By ensuring that funds are passed on the day of settlement, we are reinforcing our role in market development and regulatory advancement", he added.
The primary regulatory change that has occurred in the past year is the democratization of access to information, according to Mr. Sundararaman Ramamurthy, Managing Director & CEO of BSE Ltd. The nation's regulatory framework is more transparent, which has encouraged more people to research the stock market. In four years, the number of demat accounts has increased to 16 crores. People with incomes should be knowledgeable about mutual funds. To fully realize potential, the number of fund houses and distributors should rise. To reduce risk and maximize profits for all, we should boost passive funds. Given that women control 39% of MSMEs in this nation, many more women should have access to this potential for financial security. Improving the domestic situation for wealth distribution and ensuring investments are tapped by larger populations.
In his welcome address Mr. Sandeep Bhardwaj, Co-Chairman, National Council on Capital Market and Investors Protection, ASSOCHAM & Chief Operating & Digital Officer, HDFC Securities Ltd. said there has been a resilient growth in the financial market and investor sentiments are attracting more investments by mutual fund inflows with SIP Plan and long-term investment options. The modern Indian stock market is the 3rd biggest in the world and creates a robust health metric for the industries.
Mr. Gaurav Dixit, Director - Ratings, CareEdge Ratings focused on the growth of disciplined investors which has been evident, with mutual fund folios and accounts rising to 19.10 crores, even amidst market volatility. Despite this progress, mutual fund penetration remains low, underscoring the need to enhance financial awareness and increase transparency through a robust system. By minimizing the expense ratio and fostering active participation from regulators and industry partners, we are well-positioned to tap into the strong growth potential of the retirement market. As mutual funds continue to expand, they will play a crucial role in accelerating India's economic growth."
If we aim for an output growth rate of 8%, it's essential to implement reforms in key inputs such as land, labour, and capital, said Mr. Sandeep Bagla, Chief Executive Officer, Trust Asset Management Pvt. Ltd. The global liquidity landscape has shifted dramatically, with G4 central banks' assets expanding from close to $3 trillion in 2007-2008 to an astounding $26 trillion in 2022-23. In the short term, it is important to manage expectations cautiously, given the changing characteristics of the Indian market. A strong and adaptive regulatory framework will be critical to navigating these challenges and ensuring sustainable growth.
Ms. Sheela Kulkarni, Head – Market Development & Institutional Investor Relationships, World Gold Council - India ( WGC ) shared her insights on the gold market in India and how the financial gold market is large. Gold demand is determined by various drivers like economic expansion , risk and uncertainty and opportunity cost. She shared why people should consider investing in gold because of the liquidity it provides, diversification in a portfolio and comparable returns . Gold can improve risk adjusted returns, in portfolios and reduce volatility she further concluded.
Mr Chirag Mehta, Chief Investment Officer, Quantum Asset Management Co. Private Ltd. highlighted Mutual funds will have to continue to provide sensible products to Investors and leverage technology and distribution channels to drive financial inclusion to be successful in the Indian market. Opportunities include growing interest in mutual funds, a rising millennial population, fintech adoption, and expansion into smaller towns and rural areas. The mutual fund industry can ensure long-term growth and success by continue doing the right thing, embracing innovation and catering to diverse investor needs by offering relevant products.
A joint knowledge report by ASSOCHAM and CareEdge on Mutual Fund: “Unlocking the Potential: Exploring Investment Opportunities for Viksit Bharat” was unveiled at the event.
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